CoinCheck announced that it will pay compensation to the victims

The Tokyo-based crypto money exchange Coincheck announced a plan to offset damages to about 260,000 NEM owners for hacked 523 million XEM. According to the news posted on the company's website, the reasons for the hacking incident are still being investigated at this time.

Minute minute robbery
On January 26th, on January 26th, Coincheck took some of his functions. The company found an abnormality around 12.07 and issued a notice regarding the temporary suspension of NEM payments.

At 12:38 hrs, NEM trading was temporarily suspended.

At 16.33, the withdrawal of all currencies, including the JPY, was stopped. This followed the withdrawal of many transactions, including withdrawals, deposits, and other on-site activities for other funds outside BTC.

Company officials confirmed the robbery through hacking at the end of the day.

Coincheck calculates the damage
Coincheck, Single Bureau Inc. will use the weighted average of the volume and calculate the compensation price, taking into account the Zaif XEM currency operated by the company. The calculation period will be based on the 26 January 12.09 hours, when the sale is stopped, and the 27 January 23:00, when it will be available for resale.

The resulting calculations are calculated as 88.549 yen ($ 0.81) per unit.

The company apologized: "The security system will be strengthened."
The stock market is determined to restart services, investigate the causes of illegal transfers, and strengthen the security system.

Coincheck said Financial Services Agency would continue its activities on the crypto money market.

Security flaw
At the press conference held after the Hack event, the authorities shared details about the hacking incident and information about the infrastructure of the stock exchange.

Japanese technology journalist Yuji Nakamura has noticed that Coincheck does not implement multiple signature technology, that the attacked money is stored in the hot wallet instead of the cold wallet, and that company officials are still not sure how they are hacked.

Many cryptographic stock exchanges such as Kraken, Coinbase, Bitfinex have multiple signing security implications. This prevents the transaction from being processed on the block network until a third party security service provider confirms the legitimacy of the transaction.

The lack of a multi-signed service is considered a major security flaw for any crypto money exchange.

The funds were kept in the hot wall
In addition to not implementing multiple signing security measures, Coincheck kept all his funds in a warm wallet.

Wallets stored online in crypto money exchanges are called hot wallets, wallets stored offline (USB) are called cold wallets. For large amounts of funds, the crypto stock exchanges keep their currencies cold in order to avoid accessing user funds of hackers.